The British blockchain industry is being encouraged to reject the UK’s adoption of EU law regulating cryptoassets as part of a bid to strengthen the country’s tech industry post-Brexit, dubbed Techxit.
The law in question, 5th EU Anti-Money Laundering Directive (5AMLD), is meant to be adopted into UK law later this year. Although it is primarily focused on combating money laundering, it includes significant new restrictions on cryptocurrencies.
This includes making cryptocurrencies and their exchanges subject to the same regulations as traditional financial institutions and requiring providers of exchanges and wallets to register with their country’s financial authority.
Most controversial, however, is giving financial intelligence units the legal mandate to acquire the names and addresses of owners of cryptocurrency – taking away the anonymity that is highly prized by many users.
5AMLD and Brexit: the future of British blockchain regulation
But with Brexit on the horizon, 5AMLD’s transposition into the UK’s law remains unclear. And campaigners are arguing that rejecting it will give the UK a competitive international edge in the emerging blockchain industry at a time when the country is looking to tech to provide economic buoyancy.
At present the Financial Conduct Authority (FCA) is holding a consultation period on its Guidance on Cryptoassets publication, which explores options for how the UK should regulate cryptocurrency.
The British blockchain industry has been urged to use this consultation period to object to the implementation of 5AMLD in the country and call for a supportive approach that will allow the industry to advance in the UK.
Techxit: the bid for a “tech-focussed Brexit”
As part of this The New Athens & Associates, the organisation behind London-based blockchain tech accelerator The Assembly, has circulated a template letter to members of the British blockchain industry designed to be sent to the FCA.
It calls for the pursuit of a “tech-focussed Brexit”, which it dubs Techxit, arguing EU law is too “harsh”.
The letter argues implementing 5AMLD would “stifle tech innovation with onerous legislation”, “depress an emerging fintech industry” and “drive blockchain industry participants away from a currently friendly regulatory environment in Britain”.
“As a representative of the blockchain industry I am filled with confidence that the FCA has expressed none of the pre-emptive regulatory hostility to the blockchain and cryptocurrencies that both the SEC in the United States and ongoing EU legislation have expressed,” the letter states.
“Leaving the EU, Britain needs to make use of its reasserted sovereignty to differentiate itself economically from its neighbours and encourage growth. As both those neighbours have proven unfriendly regulatory environments, Britain’s 3rd way must be to encourage the £100bn+ blockchain industry to see Britain’s as a jurisdiction fostering its growth.”
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The FCA consultation period will run until 5th April 2019.